SecondMarket: The Face of Equity Crowdfunding?

SecondMarket announced a strategic partnership with CircleUp last week. This on the tail of a similar partnership with Angellist in the Fall. Both partnerships, currently in beta, fall under the umbrella of SecondMarket+, an initiative that is selectively partnering with leading platforms to give SecondMarket investors centralized access to high-quality deal flow. Each entail cross-listing deal-flow on SecondMarket’s platform. (Selectively so by Angellist for now; I believe CircleUp will begin cross-listing all deal-flow.)

I was surprised by the relatively quiet press response to the CircleUp announcement. The Angellist partnership was interesting. Perhaps I’m over-thinking it, but coupled with CircleUp, I believe we’re seeing the first strokes of a much larger picture being painted. One that I believe has big implications for the equity crowdfunding industry. CircleUp, by cross-listing their deal-flow on SecondMarket, is implicitly relinquishing a certain degree of control (read:ownership) over its community of accredited investors. The move indicates that acquiring accredited investors is not CircleUp’s business; the curation of high-quality deal-flow, and subsequent acceleration through a value-added ecosystem, both pre and post-funding, is. The former of which is far more costly, and immediately less scalable, than the latter.

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